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Oracle's $6.7 Billion Bid for BEA Turned Down 61

Posted by ScuttleMonkey
from the not-rich-enough dept.
andy1307 writes to tell us that according to the Mercury News, Oracle has made an unsolicited bid to buy BEA Systems for about $6.7 billion. BEA confirmed that it rejected the $17 a share bid as too low. "BEA told Phillips that its board of directors believes BEA 'is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter.' Oracle's aggressive bid may be an attempt to pre-empt an acquisition by others, Finley said. Those named in the past as potential suitors include IBM, the German software company SAP AG and Hewlett-Packard. Trip Chowdhry of Global Equity Research said he expects a counterbid from SAP, which he said needs BEA to survive. 'If they don't get BEA, probably in two years SAP will be on the block to sell itself,' Chowdhry predicted. Oracle needs to keep BEA out of competitors' hands, he said. Chowdhry said the offer currently 'is not right. Probably at $21 the deal will get done.'"
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Oracle's $6.7 Billion Bid for BEA Turned Down

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  • by User 956 (568564) on Friday October 12, 2007 @07:54PM (#20961829) Homepage
    BEA told Phillips that its board of directors believes BEA 'is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter.'

    I agree. I mean, Bea was a total powerhouse in Golden Girls.
  • by meringuoid (568297) on Friday October 12, 2007 @08:08PM (#20961951)
    ... I thought for a moment that said 'BAE Systems'.

    Oracle buy one of the world's major munitions manufacturers... well, do you want to argue about which is the best database with people who manufacture JSFs and Typhoons? No? Me neither...

    • by modecx (130548)
      Hell, that's not the worst of it! They also make nuclear submarines (and indirectly) French nuclear tipped missiles, and (far more worse than the above) what used to be the world's single largest machine (by occupied square footage)--the former Denver International Airport Baggage System (which incidentally is now ran by Siemens, which officially make it only slightly less evil than Wal-Mart, which itself is only slightly less evil than NAMBLA.)
  • by Thaelon (250687) on Friday October 12, 2007 @08:23PM (#20962021)
    I work with BEA products, namely Weblogic and JRockit. Neither impress me. Weblogic is constantly failing to hand out connections (which is it's primary job) and the stack traces JRockit produces are formatted differently from those of Sun's JVM (which prevents my IDE from turning them into clickable hotlinks that take me to the lines of offending code). FSM knows why they made them different. Oh and the line numbers in your stack trace will be wrong unless you turn off optimization - which is the the whole point of using JRockit. (It's supposed to be faster than Sun's JVM - I've never seen proof).
    • by alext (29323)
      Classic! One more "insightful" I think, no?

    • Taking a look at Oracles current strategic focus, id say they rather go for Aqualogic than Weblogic. It took its time but today OAS/OC4J is doing its job quite well - still not the best AS out there, but not as crappy as it used to be. As well the current JVM are fast enough for not needing JRockit.

      Oracle got a neat offering for implementing SOA, but some parts still need some serious improvement. Its basically missing some aspects of the top layers in a SOA, like proper support for BPM (no, ARIS wont wor

    • Re: (Score:3, Informative)

      by Walles (99143)
      Full disclosure: I work for BEA.

      the stack traces JRockit produces are formatted differently from those of Sun's JVM (which prevents my IDE from turning them into clickable hotlinks that take me to the lines of offending code). FSM knows why they made them different.

      Since about two years back our stack traces look identical to SUN's. I'm at home right now and can't give you a specific release for that change. The difference was that old versions of JRockit used to show full method signatures rather tha

  • Why? (Score:4, Interesting)

    by ebonum (830686) on Friday October 12, 2007 @08:24PM (#20962027)
    Perhaps I'm missing something. Can someone explain the great value in BEA? Why does SAP need this to survive? Does this guy own a million shares in BEAS or does he know something I don't. My knowledge in this space is a little weak. I do know that my company ( I shouldn't say who, but our market cap is a lot higher than BEAS ) very happily dumped Weblogic for jBoss. The transition went remarkably smoothly ( Disclaimer: We did have a jBoss god on staff ), and it saves us A LOT of money. We use it for hosting some very large, complicated, financial applications. Based on what I have seen, BEA sells a product that has become a commodity. It should no longer command a premium.
    • Re:Why? (Score:4, Insightful)

      by the eric conspiracy (20178) on Friday October 12, 2007 @08:41PM (#20962117)
      If you are selling enterprise products for a million dollars a pop that are based on J2EE technologies there are a lot of companies out there that don't want to hear that they are getting something based on FOSS.

      This is the space Oracle plays in. By buying BEA they get a bunch more of this kind of customer.

      To them you can bet it is worth 6.7 billion.

      • there are a lot of companies out there that don't want to hear that they are getting something based on FOSS.
        1) Give them something based o FOSS.
        2) Don't tell them. <=== clever bit!
        3) ????
        4) Profit!!!!!
      • by ebonum (830686)
        I understand your point. I hear this a lot, but it is not what we have experienced. The products is well north of a million a year, and I never heard a word about FOSS concerns from any of our clients. They did have some very intense security questionnaires and audits ( I have learned to hate SOX consultants with a very deeply set passion ), but it was equally difficult to get passed them on jBoss as it was with Weblogic. Granted, I'm only looking at a slice of less than 20 major financial institutions.
        • SOX audits have everything to do with your internal practices & logic -- the underlying infrastructure isn't going to be the determining factor.

          There are two splits in your graphs, so the current price makes the shares worth a lot more than they were in the late 90's.

          Regarding the multi-year horizon, let's compare BEAS to its competitors over the last 5 years [yahoo.com]... the value is clearly there.

          As for shutting up & taking the money... the board is doing *exactly* what it's paid to do, which is get the bes
      • This is correct. PeopleSoft, which Oracle owns, makes heavy use of both WebLogic and Tuxedo. Oracle's trying to provide their own replacement options, but BEA products are more tried and true than Oracle's stuff yet. PeopleSoft is a multi-million dollar business for the software alone, not to mention actually setting it up and customizing it.
    • by Kalriath (849904)
      Personally, I'd take "SAP needs BEA to survive" with a grain of salt. SAP just bought Business Objects, which is widely used, and I don't see them going away anytime soon.
    • by MoogMan (442253)
      Large companies are very quickly picking up speed and moving towards SOA [wikipedia.org]. Oracle is going to be left behind (read: incompatible, out of the market) if it doesn't catch up. BEA has an application server as well as an integrated JSR116 compatible SIP [wikipedia.org] stack, so it seems to make sense to buy them and get behind them to push into the SOA market.

      Also, it makes sense to take them before anyone else does, so they can integrate BEA WebLogic into it's application server and therefore lock other companies out of gaini
  • The deal will happen. If BEA wanted to stay independent they would have just said they were not selling. The fact that they said the offer was too low is negotiation.

    What happens to Oracle's OAS team and product if this happens? OAS has been soundly whipped by BEA in the marketplace and they are basically both the same thing.
    • What's the old quote? We've already established you're a whore, now we're just haggling on price.
    • by einar2 (784078)
      My bet is that OAS will disappear.
      OAS has not really any market penetration and ISVs typically support WSA or WLS. The new think for WLS would be that Oracle can "force" customers to adopt it. Most customers use Oracle DBs anyway and the WLS app server could become a necessary part of it. Oracle already tried this with OAS, just that it did work due to the lacking ISV support. IBM uses a similar schema with WSA.
    • by Angostura (703910)
      A Deal will happen, but there is nothing to say that Oracle will be the eventual purchaser.
  • No-brainer (Score:4, Interesting)

    by dustisearth (1170113) on Friday October 12, 2007 @08:30PM (#20962055)
    When the stock jumps well beyond the proposed acquisition price (to $18.82), that's a solid indication that the offer isn't going to cut it. One would normally expect a jump in price upon the announcement of a buyout offer at a premium, but typically the price will jump to some intermediate value between the previous market price and the offer price, in effect discounting for the chance that the deal will fall apart. Here the market response went well beyond that. Now the question is, will we see a bidding war? And with whom?
  • Trip Chowdhry of Global Equity Research said he expects a counterbid from SAP, which he said needs BEA to survive. 'If they don't get BEA, probably in two years SAP will be on the block to sell itself,
    So if Oracle buys BEA, does that set the scene for Oracle/BEA to buy SAP in two year's time?

    Does this mean companies need to become an international monopoly in order to survive? My mind boggles at all the corporate takeovers, M&As etc.
    • So if Oracle buys BEA, does that set the scene for Oracle/BEA to buy SAP in two year's time? Does this mean companies need to become an international monopoly in order to survive?

      Because something that was a mere buzzword for a long time finally shows some effect on the market: SOA.
      There are basically three big companies that started marketing SOA and laying the foundation with some standards: Microsoft, IBM and BEA. And they had good reasons for that. Currently "enterprise software" is graced with vendor-lockins that make Microsoft look like innocent angels.
      To do anything with SAP you need a SAP consultant that will milk you until you are dry like dust. Same for ECM systems. SOA

  • by DreadfulGrape (398188) on Friday October 12, 2007 @09:37PM (#20962443)
    Wow, did the business press ever jump the gun on this one. The headline in the Wall St. Journal this morning was "Oracle Buys BEA".
    • by MrCrassic (994046)

      I noticed this too, but it did seem as if the deal would be solid.

      I really don't know much about BEA outside of its Wikipedia entry, but I'm sure that since their solutions are database oriented (correct me if I'm wrong, please), having (what I would suppose would be) full access to Oracle's codebase is extremely advantageous.

      With the way Oracle has been performing lately on the stock market, I'm sure BEA will regret not having taken this offer. If anything, their rejection may actually harm them in the

      • Carl Icahn owns something like 15% of the company now, and is BEA's largest shareholder. He wants a sale. He just needs to convince more investors of this (80% are BEA's ownership is institutional, like mutual funds or private equity , hedge funds, etc).

        BEA will get a better price... it's how the game is played. And if it somehow remains independent, it slaps egg on Larry's face.

        BEA's stuff (like any business infrastructure) relies databases a lot, but the company isn't very database-oriented. It's a
  • Fortune 500 companies are finally wising up to JBoss as an alternative to WebLogic. BEA better not wait too long waiting for a suitor lest it find itself an old maid.
    • Get real (Score:2, Insightful)

      by einar2 (784078)
      Yeah, and pigs can fly...

      Sorry folks, we speak here about enterprise computing. Nobody really cares for open source until it is a proven product. And JBoss is not in this league. If you run several million transactions per day and each transaction makes you one EUR or more, there is nothing open source can give you:
      • Nobody else with such a load is using JBoss.
      • There is not enough support for your installation (every hour downtime is expensive ...)
      • You cannot hire people off the street who are familiar
  • If it happens or not, either way a prospect looking to buy BEA has to wonder if Weblogic (as it exists today) is still going to be around in a few years. The other big players will probably profit from the move.
  • Purchasing BEA would greatly strengthen another Oracle acquisition, namely Stellent (now known as Universal Content Management). Although the CMS is a somewhat decent middle-tier system in and of itself (well, that's if ActiveX components, IE-only GUIs, and a highly inefficient, proprietary scripting language by the name of idoc can fall into the scope of "somewhat" or "decent"), many business that implement Stellent run it in conjunction with BEA with the use of a Content Integration Suite component. From
  • This is the first time BEA has seen $18/share since 2002 - they should look at any offer in this range as a gift from the gods. I remember talking to BEA sales reps back in 1999-2000, and man they were arrogant pricks! They were absolutely positive that you needed them waaaay worse than they needed you. Based on their latest moves, I'm not sure they've learned anything since then...

    When Larry snagged PeopleSoft, they hurt BEA very badly - there are lots of PeopleSoft instances out there running under Web
    • Re: (Score:3, Interesting)

      by PCM2 (4486)

      This is the first time BEA has seen $18/share since 2002 - they should look at any offer in this range as a gift from the gods. I remember talking to BEA sales reps back in 1999-2000, and man they were arrogant pricks! They were absolutely positive that you needed them waaaay worse than they needed you. Based on their latest moves, I'm not sure they've learned anything since then...

      I once talked to some BEA execs at the BEA offices as a member of the trade press, maybe around 2001. The BEA folks in the ro

    • PeopleSoft runs on Tuxedo, not WebLogic. You might be able to run integration services under WLS, but the core is a Tux app.

      As for packaged deals, yeah, it makes competition hard, but we've whupped Oracle in competitive shoot outs on the product merits more often then not.

      • People soft is *currently* a Tuxedo app AND it was bundled with Weblogic & Websphere app servers.

        Dude - wake-up and smell the acquisitions. You competed and won against Oracle in a different marketplace - when budgets were high, best-of-breed made sense and having PeopleSoft ERP + Oracle DBMS + BEA middleware was the smart play. Fast forward to Peoplesoft v9+ and beyond that to Oracle Fusion. Oracle has already said that PS will be certified on Oracle middleware - do you really think Oracle would con
        • Fast forward to Peoplesoft v9+ and beyond that to Oracle Fusion. Oracle has already said that PS will be certified on Oracle middleware - do you really think Oracle would continue being dependent on BEA if they don't own BEA?

          I wasn't considering vapourware as part of this discussion. No doubt you're correct that Oracle wouldn't want to be dependent on our software.

          My budgets are tighter than ever before, and I'm tired of the constant need to figure out which vendor is causing me today's heartburn. I want
    • by tehcyder (746570)

      I remember talking to BEA sales reps back in 1999-2000, and man they were arrogant pricks! They were absolutely positive that you needed them waaaay worse than they needed you
      That is pretty well a universal description of a good sales rep.
  • Why not Red Hat? (Score:2, Insightful)

    by Envy Life (993972)
    I'm not sure why Oracle wants BEA Systems, which appears to be antiquated and riddled with issues at this point. As other posters have indicated, switching to JBoss is not only successful it saves a ton of money. It was near a year ago Oracle bid for JBoss, losing out to Red Hat, then created their own "Unbreakable Linux" distribution based on Red Hat Linux. If they're willing to plunk down $6.8 billion for BEA Systems, Red Hat, at a market cap of $4.15 billion is not only a relative bargain but seems to
  • by Stu Charlton (1311) on Saturday October 13, 2007 @01:59AM (#20963777) Homepage
    I don't have insider information. I am not a spokesperson at this time. This is just my opinion.

    Basically, BEA wants to stay indepdenent, because it lets us do interesting things if we keep shareholders happy. And, by and large, we had been doing just that for the past 3 years, until licenses started to fall earlier this year. Wall Street forces a quarter by quarter mentality that's very hard to meet in a midsized company, in my opinion, given that the nature of "infrastructure software" involves longer sales cycles than when the dot-com bubble kept the "J2EE app server" purchase orders flowing in.

    For those that suggest BEA's WebLogic is somehow commoditized and is the source of all of our woes, please understand a few things:

    - BEA sells a *lot* more than an app server. Both Tuxedo and WebLogic Server have not been a sales focus for years at BEA, at least in North America -- Tux is still growing in Asia. The core products are still a cash cow, so we invest most of our R&D into it, but it doesn't account for the growth we've had since 2002. Most of that has been from Portal, Integration, and the new AquaLogic stuff.

    - BEA contributes a lot to Java open source -- it's on the Eclipse board, it runs two Apache projects, is a major contributer and partner with Interface21 (the Spring guys), etc.

    - Open source has never been BEA's biggest competitor. IBM and Oracle are. Really. The reason is that a major portion of BEA's sales focus is on enterprise license deals in the $million$ range. In the smaller deals, that's more likely where you see .NET rearing its head a lot. Sure, there is some JBoss (and a lot more Tomcat!). But, JBoss generates around $22 million annually [news.com]. BEA makes that in under a week. And lest you say "But, this doesn't measure the free deployments!", we (and Oracle) don't care about those -- most companies aren't going to adopt an open source software solution for a production use without at least a support contract! Support , subscription, consulting, etc. is how RedHat is viable, it's also how BEA makes most of its revenue.

    - BEA's *new* license growth had fallen recently, but maintenance and overall revenue continues to rise. That means that, the *rate* in which our middleware is being acquired is slowing for us as of late, not that people have somehow stopped buying our stuff. So, yep, we could be doing a better job improving & selling what we have with AquaLogic and WebLogic, but it's not doom and gloom times here. Maybe it will be better under another company, I donno. Part of the problem is that pure "middleware" in general is a hard sell, as companies like TIBCO are also feeling right now -- SOA was the latest trend, with some reasonable enthusiasm and growth associated with it, but the real fortune was made in the peak of the dot-com boom, and it's hard to replicate that sort of hype. Oracle sells middleware along side applications, databases, security suites, etc., so it's not quite as hard to sell the business on the benefits.

    - I have no idea what the article is talking about with regards to SAP. I think NetWeaver is a crap pile, but that doesn't mean they're dead if they don't buy us. They could go open source, or improve it.... People stick with SAP because they're locked in, not because NetWeaver is supposed to be better.

    - Even if this deal doesn't go through, BEA is viable enough to stay independent. It has over $1B in the bank, it generates high free cash flow, and if we could get this stock options review over & done with, we could actually have some good information for the Street to price us properly. The question really is about the stock price -- whether the shareholders think we can raise it on our own, or someone else can do a better job of it.

    Anyway, I've been pretty happy with the company for the past 3 years. Regardless of what happens, it's exciting times.

    • by byronf (649750)

      I've been in the Java "Enterprise" domain for nearly ten years now. I first used BEA's weblogics back in 1999 (not even sure if it was owned by BEA yet). It was a good product, respected standards, and seemed to be development friendly. I considered it the best servlet engine at the time.

      A couple of years ago I did a contract gig for a fortune 500 company that wanted to create corporate internal and external web portals. The company purchased the entire BEA middleware stack from Weblogics to Portal to

    • For customers, middleware is not that important anymore. We have all the middleware we could need. We are served, thanks.
      Typically, customers look for business solutions. They look for standardized packages for their business domain. This is were SAP is getting stronger. (BTW, we had to tell SAP that we did not need middleware from their side...)
      The whole SOA trend goes in this direction. To stop thinking about integration as technical plumbing but as connections with a business meaning. This is an arena
    • by andawyr (212118)
      I think NetWeaver is a crap pile

      Could you elaborate? I do Java development with Netweaver 2004s/7.0, and I'm interested in why you think it's a 'crap pile'. Really, I want to know. I've had a small amount of experience with BEA, and it was a long, long time ago, so I have no idea what the major differences are between them today.

      SAP has created (or has purchased/modified) a very robust (and open) J2EE environment. It does have a few oddities (tedious develop/deploy/test cycle), but overall, I quite like
  • I thought British European Airways was merged with Brisish Overseas Aorwasy to form Brisihs Air many years ago
  • You need to buy a BEA license to use peoplesoft. I think thats the only reason they are even around anymore. Oracle and BEA deserve each other.
  • This is a master stroke of strategy. Oracle does not have to win the acquisition battle for it to win the middleware war. Let's review the outcomes:

    1) No one else steps up to bid, and Oracle ups its offer. Oracle wins BEA - the $17 offer was probably a low ball anyways.
    2) BEA keeps refusing: Licenses fall because customers are unsure of the future. Oracle LOWERS its bid and the board forces a sale (as happened with PeopleSoft) or there are shareholder lawsuits because the shares fall below the $17 v

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